The report suggests the north-south economic gap has widened

The Institute for Public Policy Research North study found output rose in London and the South East from 1997 to 2005 compared to the UK average.

The figure had fallen in the north-east and north-west of England, Yorkshire and Humber, during the same period.

The think tank called on PM Gordon Brown to set tough targets to reduce differences between the regions.

Average incomes

The institute set the UK average output per head - known as Gross Value Added (GVA) - at the figure of 100.

The government needs to get real on the north-south divide Sue Stirling IPPR North

In 1997, London (GVA 129) and the South East (114) were ahead of the North West (90), Yorkshire and Humber (90) and the North East (81).

By 2005 London (136) and the South East (115) had increased their GVA figures, while North West (88), Yorkshire and Humber (87) and North East (79) saw their ratings fall.

The figures reflect in average incomes which are �15,842 in London compared to �11,407 in the North East, according to latest figures.

'In denial'

Sue Stirling, director of IPPR North, said the government needed to target a higher rate of growth in the north to cut the gap.

She said: "The government needs to get real on the North-South divide. At the moment, it is in denial.

"The government has not explicitly targeted the gap between rich and poor, nor the gap between North and South.

HAVE YOUR SAY Find me a country which doesn't have this kind of divide. It's called the free market. Andrew Crown, Bath Send us your comments

"As a result, the work of Labour's regional development agencies has only succeeded in reducing the north's relative decline."

The Department for Business, Enterprise and Regulatory Reform said the North, Midlands and south-west of England had recently seen the same rate of growth as the south-east of England.

A spokesman said: "If the UK is to compete in the global economy, it is essential that the economic performance of every region continues to improve.

"We also recognise the importance of helping the lagging regions narrow the gap in growth rates."